Beef plant faces new liens

Spokeswoman says facility will have spring opening after bonds sold

Nearly $3 million in tax increment finance bonds to benefit Northern Beef Packers have been sold, but recent mechanic's liens have been filed against the plant.

The new liens are in addition to past claims against the processing plant, one of which is scheduled to be addressed during a court hearing later this week. Tax increment finance bonds for $2 million; $300,000; $300,000; $125,000 and $100,000 had been sold as of Monday, according to the Brown County Auditor's Office. That amounts to $2.85 million. In all, $8.5 million in TIF bonds can be sold to fund the plant on the south side of Aberdeen.

The deadline for the bonds to be sold is April 27, with the money being used to pay construction costs.

Laure Swanson, spokeswoman for Northern Beef Packers, said the remaining bonds are committed. In essence, she said, they're sold, but the paperwork is not yet finalized. A businessman will be in town this week and is expected to buy more bonds, she said.

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The sale of the bonds should allow the plant to complete construction and open later this spring — about eight weeks after the final bonds are sold — and work to pay off the liens.

Mechanic's liens filed this year for work done by contractors total more than $475,000.

Swanson said a lack of finances has slowed the recent pace of construction. The bond sales are key, she said, because Northern Beef Packers doesn't want to borrow more money.

Brown County voters in 2007 approved a tax increment financing district for the plant, allowing it to sell TIF bonds as a means of financing.

With a TIF, a portion of the property taxes generated by new developments is used to pay for certain improvements on that property for a period of no longer than 20 years.

Once the plant opens, it will have access to more financing from the state and federal governments. Plans call for it to eventually employ 650 people and process 1,500 head of cattle a day, though it will ramp up to those totals. Presently, about 200 people work at the plant.

Contractor's liens against Northern Beef Packers since the first of the year, according to documents filed with the Brown County Register of Deeds Office, include:

For $176,125 on March 25 by Jensen Rock and Sand of Aberdeen for ready mix, concrete, fuel, rebar, pea rock, grout mix and other items.

For $29,695 on March 15 by Webster Scale Inc. of Webster for installing a scale, labor and materials.

For $143,639 on March 2 by SBI General and Mechanical Inc. of Waterbury, Neb., for construction, labor and materials.

For $126,718 on Jan. 30 by Frazier Industrial Co. of Long Valley, N.J., for services, material and machinery.

A host of other businesses that have filed mechanic's liens against the plant in the past. Those total more than $12 million. While payment plans are in place with many of the lien holders, much of the money has yet to be paid. They will, though, get paid, Swanson said.

"We're committed to that," she said.

A dispute over what will happen to one of the largest liens, though, will likely be resolved in court. It was filed by Scott Olson Digging of Huron and claims the beef plant owes $2.11 million for dirtwork, though the two sides disagree on that total. Northern Beef Packers has filed a counterclaim against Scott Olson Digging claiming, in essence, that the contractor overcharged the beef plant. Other businesses seeking payment are also involved in the lawsuit.

The court hearing is scheduled for Wednesday in the case.

In October, a federal lawsuit was filed by four Chinese investors who said the offering memo provided by the South Dakota Regional Center was incomplete, inaccurate and failed to disclose risks and financing difficulties. A counterclaim against Henry Zou and his consulting firm said he had adequate information and that he was trying to sabotage the project over commissions.

The lawsuit and counterclaim were dismissed last week.

Northern Beef Packers is now 41 percent owned by businessman Oshik Song with 69 other Korean investors who each gave at least $500,000 under the federal EB-5 program that encourages foreign investment in exchange for qualifications to secure permanent residency.

In 2009, Song took over as the project's general partner for Dennis Hellwig, former owner of Hub City Livestock Auction, who originally headed the beef plant effort.

The oft-delayed, $100 million plant was supported by former Gov. Mike Rounds as part of his South Dakota Certified Beef initiative. Rounds hoped to get the state's ranchers premium prices by allowing consumers to track animals from birth, through a feedlot and to a meatpacking plant.

Local cattle producers who favor the plant say are happy that they will have a nearby market for their finished livestock. Delivering them to Aberdeen should save them transportation costs compared to having to haul them to processing plants in Sioux City or Grand Island, Neb., they say.